Uson v.

Diosomito (L-42135, June 17, 1935)

Facts:

Uson filed a civil action for debt against Diosomito and an attachment was levied upon the property of
the latter, including 75 shares of the North Electric Co., Inc., which stood in his name on the books of the
company on 18 January 1932. Subsequently, petitioner obtained judgment against respondent. To satisfy
judgment, the sheriff sold said shares at public auction. Petitioner was the highest bidder and said shares
were adjudicated to her on 13 February 1933.

Meanwhile, Diosomito was the original owner of said shares, which were sold to Barcelon. The latter did
not present these certificates to the corporation for registration until the 16 September 1932, when they
were cancelled and a new certificate was issued in his favor. He transferred the same of to H.P.L. Jollye
whom a new certificate was issued by North Electric Co., Inc.

Issue:

Whether or not a bona fide transfer of the shares of a corporation, not registered on the books of the
corporation, is valid as against a subsequent lawful attachment of said shares

Held:

No, the attachment procured by Uson prevails in this case.

Section 35 of the Corporation Law provides that no transfer of shares of stock shall be valid, except as
between the parties, until the transfer is entered and noted upon the books of the corporation so as to
show the names of the parties to the transaction, the date of the transfer, the number of the certificate,
and the number of shares transferred.

Thus, all transfers of shares should be entered on the books of the corporation. All transfers of shares not
so entered are invalid as to attaching or execution creditors of the assignors, as well as to the corporation
and to subsequent purchasers in good faith, and indeed, as to all persons interested, except the parties
to such transfers. All transfers not so entered on the books of the corporation are absolutely void; not
because they are without notice or fraudulent in law or fact, but because they are made so void by statute.

The right of the owner of the shares of stock of a Philippine corporation to transfer the same by delivery
of the certificate, whether it be regarded as statutory on common law right, is limited and restricted by
Section 35 of the Corporation Law. Therefore, the transfer of the 75 shares in the North Electric Company,
Inc., made by Diosomito to Barcelon was not valid as to Uson, on 18 January 1932, the date on which she
obtained her attachment lien on said shares of stock which still stood in the name of Diosomito on the
books of the corporation.